National Mortgage Settlement
The National Mortgage Settlement grew out of federal and state investigations which found that the country’s five largest mortgage servicers routinely signed foreclosure related documents outside the presence of a notary public and without knowing whether the facts they contained were correct. Both of these practices violate the law. [1]
Settlement Details
- Settlement Amount: Approximately $25 billion
- Date: February 19, 2012
- Initiated by: Securities and Exchange Commission and 49 States Attorneys General
The five lending institutions being held responsible are:
These five banks are supposed to provide at least $25 billion in consumer relief. At least $17 billion is supposed to be used to reduce the principal for to millions of homeowners who are behind on their mortgage payments or facing foreclosure. Another $3 billion should be used to help homeowners refinance if they are “underwater” because they owe more than their homes are currently worth. [1]
Additionally, $1.5 billion is supposed to be paid to homeowners who lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2011. However, the amounts they receive are not expected to be very large. The New York Times reported that "750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 will receive checks for about $2,000." [2] These payments are supposed be distributed to homeowners in spring 2013.
The settlement also established first-ever nationwide reforms to mortgage servicing standards. These standards require better communication with borrowers, a single point of contact, adequate staffing levels and training, and appropriate standards for executing documents in foreclosure cases. [1]
On March 12, 2012, the participants in the settlement appointed attorney and former North Carolina Commissioner of Banks Joseph A. Smith, Jr. as the Monitor who will oversee the agreement. [3]
More information is available on the National Mortgage Settlement website or on the Office of Mortgage Settlement Oversight website.
New York Attorney General Will Sue Wells Fargo & Bank Of America for Violating Terms of Settlement
On May 6, 2013, Eric T. Schneiderman, New York’s Attorney General, announced that his office will file lawsuits against Bank of America and Wells Fargo for violating the terms of the settlement. The Office of the Attorney General received 339 violations alleging that Wells Fargo and Bank of America violated four Servicing Standards relating to the timeline for processing mortgage modifications. [4] Other states could follow.
Rust Consulting Firm Bounces Checks to Consumers
Rust Consulting, the firm in charge of distributing $1.5 billion in payouts to consumers, has received several complaints due to sending out batches of checks with the wrong amounts and/or checks that “bounced” due to insufficient funds. [5] [6]
Articles and Resources
Related SourceWatch Articles
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External Resources
References
- ↑ 1.0 1.1 1.2 About the Mortgage Settlement, Organization Website, Accessed May 16, 2013.
- ↑ Schwartz, Nelson. States Negotiates $26 Billion in Settlements, The New York Times, February 8, 2012.
- ↑ About the Office of Mortgage Settlement Oversight, Organization Website, Accessed May 16, 2013.
- ↑ Press Release, A.G. Schneiderman To Sue Wells Fargo & Bank Of America For Violating National Mortgage Settlement, Website of A.G. Eric T. Schneiderman, May 6, 2013.
- ↑ Foreclosure settlement processor Rust Consulting reportedly facing Congressional scrutiny, Housingwire, May 13, 2013.
- ↑ Rust Consulting Feels Heat from Payout Recipients, Lawmakers, eCreditDaily, May 14, 2013.
